This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Contact: AtlanticYardsReport[at]hotmail.com

A quieter--at least to an American audience--but cynical and deceptive activity was also under way: a third effort to essentially sell visas to Chinese millionaires (and their families) in exchange for short-term low-interest loans of $500,000 that purportedly create ten jobs.

The"Atlantic Yards III" promotion--aiming at $100 million from 200 investors--should save Greenland Forest City Partners tens of millions of dollars in interest, while delivering big fees to the middlemen, including lawyers, immigration consultancies, and the U.S. Immigration Fund, the federally-authorized regional center that packages the investment.

It comes on top of $228 million raised in 2010 by Forest City Ratner under the federal government's EB-5 program, and $249 million raised earlier this year by Forest City, in combination with Greenland. (In the Chinese EB-5 market, the Atlantic Yards brand has enough cachet that they're not calling the project Pacific Park.)

From the opening seminar Oct. 10 in Shanghai; Nicholas
Mastroianni III of U.S. Immigration Fund at left

Why bother, when the partners presumably have a significant amount of equity? Because they need loans to proceed with the project, and they want a bargain.

“It’s a very low-cost way to fill out your capital stack," a real estate lawyer has said, comparing a 12% interest rate for a mezzanine loan to an EB-5 loan in "the low single digits."

(The immigrant investors care more about getting green cards, and getting their money back after five years, than a robust interest rate.)

Reasons for cynicism about EB-5

The federal government's EB-5 program should inspire significant cynicism on its face, given that it's dubious to let the wealthy, especially ones with no special skills, jump the immigration line.

Also, it's fundamentally dubious to hand out green cards when no actual new jobs need be counted (indirect jobs are OK) and when private companies--not the public--are the major beneficiaries.

The EB-5 track record should inspire further cynicism, given that, to qualify for the $500,000 investment, the regional centers gerrymander the map to ensure that the project is located in an area of high unemployment. (Remember the "Bed-Stuy Boomerang" that encompasses Atlantic Yards?)

Indeed, the gold rush is such that EB-5 has generated some clear scandals, such as the one that inspired a Fortunecover story in July, or the one that's become a huge topic in the race for Senate in South Dakota.

"[B]ecause the EB-5 industry is virtually unregulated, it has become a magnet for amateurs, pipe-dreamers, and charlatans," observed Fortune, which offered a good primer on EB-5.

Why this EB-5 project is even more questionable

With Atlantic Yards III, the scandal is what's legal or--apparently--tolerated by agencies that pay too little attention. But it should inspire more cynicism (as with "Atlantic Yards II") for three major reasons:

At the opening seminar: shooting hoops with Sam Perkins (?)

the publicity for the project accents the Barclays Center and basketball, but the investment under consideration cannot go into the already-constructed arena

the publicity claims support not only from officials no longer in office but also a current top State Department diplomat

Greenland Forest City Partners, the joint venture that will reap the savings from a below-market loan, is 70% owned by the Greenland Group, itself owned by the Shanghai government

In other words, as with the second round of Atlantic Yards fundraising, a foreign government is profiting by marketing a scarce U.S. public resource--green card slots under the EB-5 program--to its own citizens.

This is, as far as I know, unprecedented. And the role of Greenland (see the green logo at top left in the advertisement below) enhances the investment for a Chinese audience.

If this is legal, it's unimaginable this scenario was contemplated by Congress when it authorized the program in 1990, aiming to compete with other countries that were welcoming the world's wealthy in the wake of uncertainty in Hong Kong.

In other words, it's twisting the spirit, if not the letter, of the law even more than the dubious 2010 first round of Atlantic Yards EB-5 fundraising.

Then again, Forest City Ratner and Greenland, two hard-charging companies willing to push the envelope, seem to have good company with the Qiao Wai Group, itself questioned in the Chinese press in 2011, and the U.S. Immigration Fund.

The firm's leader, Nicholas Mastroianni II, as Fortunejust reported, "has a long history of legal problems, failed ventures, and unpaid debts—which have continued even as his professional fortunes have turned sharply upward—leaving a legacy of conflicts, judgments, and entanglements."

(Earlier this year Mastroianni hired Charles Gargano to promote EB-5 projects. As former head of the Empire State Development Corporation, New York state's economic development agency, he can offer the patina of government support, which provides an edge before Chinese audiences.)

Misleading pitch, claiming diplomat's nod

One immigration lawyer has decried a "pandemic of hype-driven EB-5 marketing," particularly in China. The promotion for "Atlantic Yards III" sure qualifies, where a not-so-savvy audience can be seduced by the glamor of an arena and the NBA.

While advertisements for the first seminar (see left) showed the planned three towers around the arena, of course, there was no mention that the first tower, built via experimental modular technology, is stalled and mired in lawsuits.

It's misleading, notably under the heading of the Chinese terms for "government support," as indicated in the graphic below right.

The proponents of the "Atlantic Yards III" investment, on a web page set up by the Qiao Wai Group migration consultancy, include elected officials like Mayor Mike Bloomberg, Gov. David Paterson, and Borough President Marty Markowitz, who are no longer in office.

There's no way they can support the specific $100 million investment in Atlantic Yards III, which presumably will be aimed at construction of residential towers and/or infrastructure--unless it's somehow deployed to pay off previous EB-5 loans.

Their comments, according to a machine translation, represent general support for the arena, Atlantic Yards, and jobs, not the specific EB-5 investment,

Also, this is the first time I've ever seen EB-5 promoters claim that a top U.S. diplomat is in support, in this case Charles Rivkin, Assistant Secretary of State for Economic and Business Affairs. As far as I can tell from a machine translation, Rivkin is saying optimistic things about Atlantic Yards.

It's highly doubtful, however, that if he said such things, he did so in official support of the overall Atlantic Yards project, much less official support of this specific EB-5 investment. (I've queried the State Department. Update: they got Rivkin removed.)

As noted in the screenshot of the translated headline at right, the visit by the NBA teams was promoted, at least in China, as part of the EB-5 immigration program. One article from Qiao Wai promised VIP tickets for the a Nets game.

And, as shown in a photo near the top of the page, at the Oct. 10 event, visitors got to shoot a basket with a very tall ex-professional basketball player, apparently Sam Perkins.

According to a Chinese language news account of the event, Perkins was joined by current Net Jarrett Jack as well as Chocolate Thunder himself, the retired Darryl Dawkins, who also participated in the 2010 effort at EB-5 fundraising. (I wrote in 2010 how project promoters relied on the distraction of basketball.)

Darryl "Chocolate Thunder" Dawkins helps hawk green cards

Also participating were CEI Ding Ying of Qiao Wai, Nicholas Mastroianni III of the U.S. Immigration Fund, and Chris Clayton of Forest City.

The apparent success of the previous Atlantic Yards EB-5 fundraising--numerous investors have seen their I-829 petitions granted, thus allowing permanent residency after a two-year conditional period--has fueled similar claims about Atlantic Yards III.

According to the news account, 14 Chinese families signed up on the spot, a good start to the 200-investor quota.

Then again, the entire history of EB-5 promotion has stressed the arena and basketball, even though the money was not going into the arena.

Due diligence investigation by immigration firm?

Check out the photo at right, from the web site of the Kunpeng immigration consultancy, which shows Kunpeng affiliates visiting the arena and holding basketball, joined by noncredible pitchman Gregg D. Hayden of the New York City Regional Center (the middleman for the first round of EB-5 money) and, I believe, Rebecca D'Eloia of Forest City Ratner.

The Qiao Wai web site also apparently suggests that, according to a machine translation, "the government will provide an additional $18.3 million" in subsidies and tax breaks. It's unclear what that means, but it may refer to the subsidies assigned to one or more residential towers.

One final element of the pitch is that the fourth and fifth stages of Atlantic Yards--who knew it was divided that way?--will not be open to EB-5 investors. (We'll see.)

Who's involved

As shown in the screenshot below, the promotion from Qiao Wai touts the role of several "heavyweight guests" (according to machine translation), some of whom may not be formally involved in the EB-5 pitch.

In the top left is Qiao Wai's Ding Ying, followed by Forest City Ratner's Melissa Burch, Chris Clayton, and Jeffrey Rosen. At top right is the U.S. Immigration Fund's Nicholas Mastroianni II, and at bottom left is his son Nicholas Mastroianni II.

Then, oddly enough, come the retired players Perkins and Dawkins, as well as current Nets players Mason Plumlee and Jarrett Jack. As noted above, Jack apparently attended one promotional seminar. Perhaps Plumlee was assigned to the other

Fun fact: Plumlee is described in Chinese---at least according to imperfect machine translation--as "the American version of Yao Ming." That's is a disservice both to the legendary, post-playing 7'6" Chinese center and the mobile, promising 6'11" second-year Nets center-forward.

Who's in charge? Greenland

It's notable that the Qiao Wai web site portrays the partners with Greenland's Zhang above Forest City Enterprises CEO David La Rue. (It also associates him with the subsidiary Forest City Ratner.

By contrast, when "Atlantic Yards II" was presented to potential buyers, the Greenland deal was announced by not consummated, and LaRue came first.

The text below about Greenland, according to a machine translation, describe the history of the company, its significant growth internationally, and the process to take 70% ownership of Atlantic Yards.

The text about Forest City describes the company's history, range of activities in key markets, and previous EB-5 immigrant investor projects, according to a machine translation.

Promoting Barclays Center

Remember, the arena is irrelevant to the EB-5 investment at hand, but the Qiao Wai web page still promotes it.

There's an approving quote from Nets player Mirza Teletovic, as well as "local retired teacher Andrea Cave," whose quote apparently comes from her statement to the Daily News that the area "was really crappy" at one time but is "much safer now."

More glaringly, there's a screen shot of the free daily Metro, which offered an enthusiastic "sneak peek at Barclays Center" in August 2012. Unmentioned here, of course, is that the section was an advertorial.

Then again, in China, pay-for-play is so routine "many publications and broadcasters even have rate cards listing news-for-sale prices," the New York Times reported in 2012.

The launch seminar, on October 10, was only the first. As the screenshot at right indicates, 12 such seminars were scheduled around China.

Reassuring investors

One article from Qiao Wai detailed the history of events at the arena and reported that several reporters from Chinese news outlets visited the Barclays Center and reported that it was a good example of an EB-5 project.

They are apparently in the photo below.

Previous postings on Chinese web sites include photos of Forest City Ratner and Greenland executives cordially memorializing their transaction.